Oil commentary - 11 March 2025

Morning all. I have to say, I was pleasantly surprised by the number of people who enjoyed me raising “TFI Friday” in my commentary last week. Several of you, though, said, “Ha, 1996? Yeah, wasn’t even born then, Stan!” Let’s gloss over that and get into oil, shall we?

Brent is trading this morning at $69.24, down 0.04, and WTi is trading down 0.11 at $65.92. I just want to clarify something, if I may. And no, it’s not clarification that Arsenal have choked again, OK? No need to clarify that. Yet. No, I just want to put some things in context regarding what many a financial journalist is calling the recent sell-off in equity markets a “rout”.

Since the start of the year, the Dow Jones is down by around 1.5%, the S&P is down by approximately 4.5%, and the Nasdaq (gulp) is “only” down around 9.5%. Now, if your first name is Elon and your last name is Musk, then yes, running for the hills would be part of the vocabulary, with Tesla down 15% yesterday and 50% since its high in December. But a rout in markets? No. And here’s the context – the bear market in 2022 saw the S&P fall over 25%. That was a rout. During COVID, the S&P plunged by around 35%. But you call that a rout? THIS IS A ROUT – during the 2008 financial crisis, the market collapsed by over 50% from its peak.

The 2025 markets are in a shakeout, not a meltdown. As Jim Ratcliffe calls this season for Man Utd, “we are in a year of transition, want to buy some petchems, by the way?” I may have made the last part up, but you get it, and I’d argue markets are transitioning too.

Perhaps markets had priced in too much optimism on what Trump might do to keep things on a delusional upward trajectory – but that hasn’t materialised. Oil markets have largely followed and nowhere was this more evident than yesterday when Asia and Europe were trading and Brent reached the dizzying heights of $70.88 before the US woke up, said enough of all this bullish nonsense, and down we went to $69.05 before anyone could argue a Katz’s deli sandwich for lunch.

Markets being driven by a wider macro environment is hardly breaking news, but I am sure current factors will serve as a nice little distraction from what is happening fundamentally in oil markets. That Q1 demand data is only just around the corner, and once that starts feeding in, we will finally see what supply and demand balances really look like.

Thoughts and prayers are with the crew involved in the tragic North Sea collision yesterday – hoping for the best for everyone affected.

Good day, and rest of the week to all.

?